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Question
'Telecom Ltd.' issued 20,000 Equity Shares of ₹ 10 each at a premium of ₹ 5 per share, payable as: ₹ 7 (including premium) on application, ₹ 5 on allotment and the balance after three months of allotment. A shareholder to whom 200 shares were allotted failed to pay the allotment and call money and his shares were forfeited. 160 of the forfeited shares were reissued for ₹ 1,600.
Give necessary entries in company's Journal and the Balance Sheet.
Solution
Issued and Applied 20,000 equity shares of ₹ 10 each at a premium of ₹ 5
|
Application |
₹ |
7 |
(2+5) |
|
Allotment |
₹ |
5 |
|
|
First and Final Call |
₹ |
3 |
|
|
|
|
15 |
(10+5) per share |
Books of Telecom Ltd.
Journal Entries
|
Date |
Particulars |
L.F. |
Debit Amount (₹) |
Credit Amount (₹) |
|
|
|
Bank A/c |
Dr. |
|
140,000 |
|
|
|
To Equity Share Application A/c |
|
|
140,000 |
|
|
|
(Share application money received for 20,000 shares at Rs 7 each) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Share Application A/c |
Dr. |
|
1,40,000 |
|
|
|
To Equity Share Capital A/c |
|
|
40,000 |
|
|
|
To Securities Premium A/c |
|
|
1,00,000 |
|
|
|
(Share application money of 20,000 shares transferred Share Capital at Rs25 per share and Securities Premium at Rs 5 per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Share Allotment A/c |
Dr. |
|
1,00,000 |
|
|
|
To Equity Share Capital A/c |
|
|
1,00,000 |
|
|
|
(Share allotment due on 20,000 shares at Rs 5 each) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
99,000 |
|
|
|
Calls-in-Arrears A/c |
Dr. |
|
1,000 |
|
|
|
To Equity Share Allotment A/c |
|
|
1,00,000 |
|
|
|
(Share allotment received on 19,800 shares and a holder of 200 shares failed to pay it) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Share First and Final call A/c |
Dr. |
|
60,000 |
|
|
|
To Equity Share Capital A/c |
|
|
60,000 |
|
|
|
(First and final call due on 20,000 shares at Rs 3 each) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
59,400 |
|
|
|
Calls-in-Arrears A/c |
Dr. |
|
600 |
|
|
|
To Equity Share First and Final Call A/c |
|
|
60,000 |
|
|
|
(First and final call received on 19,800 shares and a holder of 200 shares failed to pay it) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Share Capital A/c |
Dr. |
|
2,000 |
|
|
|
To Share Forfeiture A/c (Rs 2 × 200 Shares) |
|
|
400 |
|
|
|
To Calls-in-Arrears A/c |
|
|
16,00 |
|
|
|
(200 shares of Rs 10 each forfeited for the non-payment amount due Rs 8 per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
1,600 |
|
|
|
To Equity Share Capital A/c |
|
|
1,600 |
|
|
|
(160 shares of Rs 10 each re-issued for the sum of Rs 1,600) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Forfeiture A/c |
Dr. |
|
320 |
|
|
|
To Capital Reserve A/c |
|
|
320 |
|
|
|
(Balance in Share Forfeiture of 160 re-issued shares transferred to Capital Reserve) |
|
|
|
|
As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.
A Ltd.
Balance Sheet
|
Particulars |
Note No. |
Amount (₹) |
|
I. Equity and Liabilities |
|
|
|
1. Shareholders’ Funds |
|
|
|
a. Share Capital |
1 |
1,99,680 |
|
b. Reserves and Surplus |
2 |
1,00,320 |
|
2. Non-Current Liabilities |
|
|
|
3. Current Liabilities |
|
|
|
Total |
|
3,00,000 |
|
II. Assets |
|
|
|
1. Non-Current Assets |
|
|
|
2. Current Assets |
|
|
|
a. Cash and Cash Equivalents |
3 |
3,00,000 |
|
Total |
|
3,00,000 |
NOTES TO ACCOUNTS
|
Note No. |
Particulars |
Amount (₹) |
|
|
1 |
Share Capital |
|
|
|
|
Authorised Share Capital |
|
|
|
|
…… Equity Shares of Rs 10 each |
- |
|
|
|
Issued Share Capital |
|
|
|
|
20,000 Equity Shares of Rs 10 each |
2,00,000 |
|
|
|
Subscribed, Called-up and Paid-up Share Capital |
|
|
|
|
19,960 Equity Shares of Rs 10 each |
1,99,600 |
|
|
|
Add: Shares Forfeited (40 shares × Rs 2) |
80 |
1,99,680 |
|
2 |
Reserves and Surplus |
|
|
|
|
Securities Premium |
1,00,000 |
|
|
|
Capital Reserve |
320 |
1,00,320 |
|
3 |
Cash and Cash Equivalents |
|
|
|
|
Cash at Bank |
3,00,000 |
|
Working Notes: 1. Share Forfeiture of Re-issued Shares
|
Share Forfeiture (at the time of forfeiture after deducting premium) |
Cr. |
2 |
(7 – 5) |
|
Less: Share Forfeiture (at the time of re-issue) |
Dr. |
NIL |
|
|
Balance in Share Forfeiture after re-issue |
Cr. |
2 |
per share |
Capital Reserve = Balance in Share Forfeiture after reissue (per share) × Number of Shares Re-issued = Rs 2 × 160 = Rs 320
2. Calculation of balance remaining in Share Forfeiture Account (to be shown in the Balance Sheet)
|
Share Forfeiture (at the time of forfeiture of 200 shares) |
= |
400 |
Debit |
|
Less: Share Forfeiture (at the time re-issue of 160 shares) |
= |
(320) |
Credit |
|
Balance in Share Forfeiture Account (for 40 shares which are not re-issued) |
= |
Rs 80 |
Debit |
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| Equity Share Capital A/c | Dr. | ₹X | |
| To share Forfeited A/c | ₹Y | ||
| To Equity Share Allotment A/c | ₹Z |
Here X, Y and Z are:
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Based on the below information, you are required to answer the following question:
|
Nidiya Limited was incorporated on 1st April 2017 with a registered office in Mumbai. The capital clause of the memorandum of Association reflected a registered capital of 8,00,000 equity shares of ₹ 10 each and 1,00,000 preference shares of ₹ 50 each. Since some large investments were required for building and machinery the company in consultation with vendors, M/s VPS Enterprises, issued 1,00,000 equity shares and 20,000 preference shares at par with them in full consideration of assets acquired. Besides this, the company issued 2,00,000 equity shares for cash at par payable as ₹ 3 on application, 2 on the allotment, 3 on the first call and 2 on the second call. Till date, the second call has not yet been made and all the shareholders have paid except Mr. Ajay who did not pay allotment and calls on his 300 shares and Mr. Vipul who did not pay the first call on his 200 shares. Shares of Mr. Ajay were then forfeited and out of the 100 shares were reissued at ₹ 12 per share. |
What is the amount of security premium reflected in the balance sheet at the end of the year?
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Prepare Share Forfeiture account.
MV Ltd. was registered with a capital of ₹ 2,00,000 divided into 10,000 Equity shares of ₹ 20 each payable as follows:
| On Application | ₹ 5 per share |
| On Allotment | ₹ 7 per share |
| On First & Final Call | ₹ 8 per share |
The company offered 5,000 shares to the public for subscription. It received applications for 6,700 shares.
From amongst the applicants:
- Vimal, who had applied for 1,500 shares, paid ₹ 7,500 on application, but was allotted only 800 shares.
- Abhay, who had applied for 2,000 shares, paid the full amount of ₹ 40,000 with his application, but was allotted only 1,000 shares.
- Nitin, who had applied for and allotted 500 shares, did not pay the allotment and call money when due.
- The remaining applicants paid as and when due.
The surplus money paid by both Vimal and Abhay was used towards allotment and call and any surplus beyond the call was refunded.
The company forfeited Nitin's shares after the final call.
You are required to pass journal entries to record the above transactions in the books of the company.
Tulip Ltd. allotted 45,000 Equity shares of ₹ 10 each to the public. The first and final call of ₹ 2 per share was not received on 1,000 shares, which were forfeited by the company. Later, 600 of the forfeited shares were reissued at ₹ 7 fully paid-up. What is the Subscribed Capital of the company?
